THERE IS MORE TO THIS BOOM THAN BOOMERS
The Information Revolution
Has Entered Its Prosperity-Enhancing Phase
DAVID PEARCE SNYDER
Prepared for the December, 1999, Issue of DEVELOPMENTS Magazine
The Journal of the American Resorts Development Association
Revised March 2000
The resort, recreation and leisure business is about to catch the wave.
And its not the 'age wave' they usually think about i.e. the
socio-demographics of maturing baby boomers. It is a different and more
profound wave: the prosperous phase of the information revolution.
Things in the U.S. have been going very nicely lately. But, things
hadn't been going all that well in the recent past. Why are things better
now than they were in the 1980's and early 1990's? It's because we have
finally achieved that stage in the information revolution where high-tech
innovations in the workplace consistently lead to greater productivity,
profitability and prosperity throughout all sectors of the economy.
Historically, technological revolutions take two generations about 70
to 80 years to evolve from the stage of first practical demonstration to
the point at which the new technology's benefits are generalized throughout
the economy. The computer was invented 53 years ago, so we are about
two-thirds of the way through this transition. Economic historians tell us
that during its first 25 years a new technology is so costly and clunky and
unreliable that it has no effect on the economy whatsoever. During the next
25 years, purposeful applications are found and many people buy the new
technology to apply to specific tasks or operations, but it is still
expensive, still unreliable and still clunky. During this
"counter-productive" period of a new technology's adoption, a nation's
productivity and prosperity both fall.
This is what happened in the United States after 1970. From 1970 to
1995, average weekly wages in America fell 15.5%. For men it was worse.
Men's wages fell 22.0%. Women's wages fell only 7.0%. The gender gap in
wages closed during the last 25 years not because the women caught up but
because the men lost so much ground. To make up that loss, married women
entered the marketplace in unprecedented numbers. In the late 60's one-third
of married couples both worked full-time. By the mid-80's it was two-thirds.
Today in America, over 70% of all married couples between the ages of 19-55
both work full-time to maintain middle class lifestyles without middle income
jobs. The underlying cause of this remarkable adaptive behavior has been the
decline in our productivity improvement rate.
Fortunately, after about 50 years, the economic historians go on to say,
a technology finally becomes good enough and cheap enough to produce
significant economic gains across all industries, trades and professions. In
1994, U.S. productivity and wages began to rise. Currently, productivity is
rising at more than twice the average rate of the last 25 years. This is not
a short-term fluke; it is mature information technology. Historically,
seven-eighths of the benefits from a technologic discovery occur two-thirds
of the way through the transition. The cornucopia is here. At current
productivity-improvement rates, the Commerce Department says average family
income will rise from $43,000 a year today to over $70,000 a year by 2020.
CHANGING LIFESTYLES, CHANGING MARKETS
In order to fully appreciate what the impending surge in prosperity may
mean for resorts of the future, it is important to reflect upon how society's
adaptation to the dramatic changes of the past quarter century has already
powerfully shaped the resorts' market. For example, rising numbers of
working wives and mothers kept U.S. household income up even as average wages
were falling. One consequence of this adaptive behavior was a substantial
loss of discretionary time by the "domestic manager" i.e. wife/mother and
ultimately, by the entire household. Thus, the purchase of recreational/
resort property remained fiscally affordable for a relatively stable share of
all households throughout the 1970's, '80's and early 1990's. For the
rapidly growing numbers of time-short, two income families, however,
year-round ownership of a second home was simply not "temporally" affordable.
The surging demand for time-share resort accommodations and the
concomitant stagnation in the sale of freehold recreational properties
correlates directly with the rise in 2-wage-earner households.
Indeed, the rise of the overall consumer service economy has closely
paralleled the rise in 2-income households, plus increases in the average
workweek among managerial, technical and professional employees, and a near
doubling of average commute time in the past 25 years. Time-short U.S.
households have, in turn, begun to contract out a wide range of domestic
services they don't have time for, including lawn care, home and auto
maintenance, housekeeping, child care, laundry and meal preparation. Today,
over half of all meals in America are eaten in restaurants and another 10%
are commercially prepared e.g. carry-out, frozen entrees, etc. to be
eaten in the home. As the ultimate service for a time-short clientele,
top-of-the-line urban condominiums are bringing back a hallmark feature of a
more gracious age, the classic concierge, who will make restaurant
reservations, book airline tickets, arrange accommodations for visiting
relatives, pick up and deliver shopping, and find a plumber on Sunday.
Providers of all service-intensive products including resort and
recreational properties must now consider their future in light of a
long-term rise in average individual wages, and the growing likelihood that,
from now on, fewer and fewer households will require 2 wage-earners to
maintain middle-income life styles. At various times in U.S. history i.e.
major wars, economic depressions, etc. America's wives and mothers have
entered the commercial workforce to augment household income and/or increase
national output. In every case, however, the great majority of women have
left gainful employment as soon as peace and prosperity have been
re-established. In the next 10 to 20 years, as individual wages soar, it is
entirely reasonable to expect that substantial numbers of women and men
will elect to leave gainful work to become full-time domestic managers. A
number of surveys of working women suggest that at least half would leave
commercial employment if financially able to do.
The return of full-time managers to millions of American households will
almost certainly reduce the marketplace demand for some time-saving services,
from child and lawn care, to home maintenance and restaurant dining. It also
seems plausible that households who invest in the careful management of
family time and finances will find outright purchase of vacation property to
be more appealing than time-sharing arrangements. On the other hand,
time-sharing appears to be perfectly suited to the circumstances of another
prosperous and rapidly growing segment of the leisure property market
TODAY'S RETIREES ARE LESS RETIRING
The great majority of Americans retire between the ages of 55 and 65;
this age group will be the fastest-growing portion of the U.S. population
between now and the year 2010, increasing from 10% to nearly 16% of all U.S.
adults. What's more, today's retirees are largely in good health, with
reasonable expectations of a long, active leisure life. In 1950, the average
age at time of retirement was 67, and the average age at time of death was
68. In a very real sense, there was essentially no life after retirement 50
years ago. A prolonged life of retirement wasn't even a realistic concept.
By 1990, the average age at retirement had dropped to 57.5, while the average
U.S. life-span had increased to 77, offering the average individual the
reasonable promise of 20 healthy, financially stable years after leaving work.
As might be imagined, this new perspective on life-after-work is
provoking a variety of adaptive social behaviors. To begin with, roughly
one-third of all retirees go right on working, often for their former
employer, or as free-lance practitioner/consultants. Another 10% to 15%
start brand-new careers in new fields. Meanwhile, a growing number of
employers are adopting "gradual retirement" polices that permit employees to
gradually reduce their work schedules to fewer and fewer days per week over 2
or 3 years. Whether retirement is gradual or all-at-once, new retirees today
are less likely than their predecessors to relocate to retirement communities
immediately after the end of formal employment. More than 40% of retirees
report involvement in community activities that make them less likely to
move. In addition to community activity, for most post-retirement
households, much of their newly-available discretionary time is spent in
explicitly recreational activities, including travel and tourism.
With their awareness of the world broadened by a life-time of exposure to
the mass-media, today's retirees are much less likely than previous
generations to be easily guided to choose from a "menu" of standard
recreational "packages," or to be content with the traditional array of
leisure activities. The popularity of spectator sports, especially among
mature Americans, is declining. The popularity of participatory sports is on
the rise. The doctor says "stay active," so that is what they want to do.
They don't want to settle down. They want to move around. Many sell the big
house, put the furniture in storage, and spend several years moving around.
They rent in places they always wanted to visit. They are willing to give
lots of places a try. "Let's go to the seashore and then to the mountains,
or even overseas." Prosperous and healthy, the new retiree is not interested
in settling down. They are seekers of experiences.
The travel/transport industry is the biggest in the world and the fastest
growing. Now at three and one-half trillion dollars a year, the industry
will double in the next ten years. But for today's retirees, just plain
off-the-shelf tourism won't cut it. They want eco-tourism. They want
agri-tourism. Or histo-tourism, edu-tourism and adven-tourism. Free of what
they had to do i.e. work and raise a family fresh and healthy retirees
are eager to do what they want to do. They are candidates for sophisticated
travel for its own sake. They will ride the Orient Express. They'll take a
cruise ship to six European cities so that they'll only have to unpack their
bags once. They will go back to school, not just for a hobby, but for a new
career. And perhaps most surprising, a growing number of 21st Century
retirees will get divorced. The 55 to 64 year olds have the most rapidly
rising divorce rate in America today. With the kids launched and their work
years completed, more and more couples look at each other and decide that
they have become different people. These divorces are often compatible; the
couples remain friends with a shared past but with differing desires for the
RETIREES RENEWING RURAL AMERICA
When they finally settle down and get serious about retiring, the current
crop of retirees continues to march to a "different drummer" from their
parents. Fewer express a desire to relocate from their existing communities
than retirees of the 1970's and 1980's. While about one-third of retirees
who change primary residences choose to relocate to the "sun belt," nearly
half simply move to a smaller residence in their existing community, while
roughly one-fourth choose to move to a rural area within 2 or 3-hours drive
from where their adult kids live; i.e. close enough to see their
grandchildren on weekends, but not close enough to be baby-sitters.
In fact, rural areas are giving rise to "NORC's," (Naturally Occurring
Retirement Communities). Life in small towns is more predictable, more
manageable, and more affordable. In small town America, rush hour lasts 15
minutes, and there's never any gridlock. The cost of living in rural areas
is also 15% to 20% lower than in adjacent urban and suburban communities. In
fact, high-tech employers began moving into small towns in growing numbers
during the 1990's, searching for under-employed, low cost, high quality
workers in the face of tightening urban labor markets. Overall, the
metropolitan regions of America are now losing half-a-million people a year
to rural communities, reversing a 100-year trend and creating an economic
renaissance in much of rural America, in spite of an ongoing crisis in
For the first time in the 20th Century, rural areas are growing faster
than cities or suburbs. While this rural renaissance rests upon a variety of
factors that differ from region to region around the nation, the in-migration
of retirees who bring their income with them represents the single
largest source of the new rural prosperity. As the retiree population
swells, rural communities will compete as ferociously for retirement
developments as they do now for chip plants, theme parks, and prisons.
Within 20 years, millions of retiring baby boomers will have changed the
population and the economics of rural America.
THE MIDDLE CLASS MOVES BACK DOWNTOWN
Meanwhile, cities are also coming back. Originally built to provide huge
pools of cheap labor for manufacturers, cities subsequently prospered as
homes for labor intensive information work. But if you have computers, you
don't need skyscrapers full of white collar workers. So, what do you do with
an idle and empty skyscraper? In 1994, Donald Trump suggested the answer.
How about creating a condominium communities? How about having 30 floors of
condominiums, five floors of offices, five floors of shops plus adequate
in-door parking, all under one roof? Commute to work, go shopping and
dining, all by elevator.
Following Mr. Trump's proposals, most U.S. cities starting with the
Borough of Manhattan have adopted mixed-use zoning codes down town, plus
tax incentives for converting office to residential space. In New York City
alone, 7,000 residential units have been created in the Wall Street financial
district in just the past 5 years. And if you have middle class housing,
sports arenas, cultural centers, restaurants and shops, will downtown America
become attractive again? Of course it will. And would such central cities
be nice places to visit? You bet! Resort developers are already building
timeshares in urban locations.
Urban resorts are convenient to the 70% of Americans who live in cities
and suburbs, most of whom are members of two-income households with two work
schedules to coordinate for a vacation, plus school schedules. As a result,
the recent trend in vacations has been away from 10-14 days once or twice a
year, and toward 3-4 days six or seven times a year. Increasingly, one or
more of those "short break" holidays will involve visiting a revitalized
Finally, since the high tech revolution is here, e-commerce is here.
Over one-half of all the households in America now have a computer. Over
one-third are on the Internet, and shortly, over one-half of all households
with children will be on the Internet. Since computer buyers are generally
middle and upper income families, the computerized half of all households
represent virtually all of the resort market.
The growth of Internet retail sales has been startling: one billion
dollars in 1995. Two billion in '96. Four billion in '97. Last year it was
13 billion. At current rates, e-tailing will reach $125 billion by 2003.
And where will the principal growth be? Insurance, banking, brokerage and
If you think that panics the insurance agents and stock brokers, you are
correct. There is even more reason to panic if you are a tenured professor
in a small college. From now on, most post-secondary education will be
acquired at local community colleges, or at home, over the Internet, and not
on a distant campus. Voice recognition software will be standard on all PC's
within two years. Within five years, our computers will chat with us. And,
within a decade, you will be able to converse in real time with someone who
doesn't speak your language, using instant electronic translation.
So here is my final thought. Go buy up those small town, small college
campuses and convert them to "living and learning" centers for retirees.
Sell the nostalgia but don't ever try to fund the football team.
MORE TRENDS RESHAPING YOUR WORLD
o During the decade ahead, techno-economic restructuring will give Americans
a rising level of prosperity; 60% of all newly created jobs will pay
above-averagesalaries between now and 2010.
o The time-short culture will last another five to ten years; by 2010, more
than two-thirds of all U.S. jobs will offer middle to upper income salaries
andbenefits, and the numbers of 2-wage-earner households will fall.
o This prosperous marketplace will fall into three life stage segments; 40
million Pre-Family Households (unmarried young adults, aged 19-35); 100
million Family Households; and 40 million Post-Family Households (adults
over 55, two-thirds of whom live alone.)
o Multiple generation households will increase. "Extendable" families began
to replace nuclear households in the 1980s, when young adults (19-24) found
that falling wages kept them from earning enough money to maintain
independent households. So they quit leaving home. In 1980, half of this
age group lived with their parents. Today it is two-thirds. In 1980, seven
percent of the 25-34 year olds lived with their parents. Today it is 17.5
percent. What's worse, when young adults finally do leave home, fully
one-half return within 30 months, often bringing spouses or offspring with
them. (Demographers call
this phenomenon the "Baby Boom-erang.")
o Now that wages are rising and general prosperity has returned, Americas
adult children are finally leaving their parents homes for good, and their
parents are busy building granny flats and mother-in-law wings to accommodate
their own aging parents. So long as seniors remain in good health, most
prefer to live on their own. But, as the elderly become infirm, most are
cared for by their adult children, rather than by an institution. By 2020,
1/4 of all U.S.
households will include at least one elderly relative.
o Home-based salaried workers will increase to 15 million in the next five
years. Home-based self-employed will be 15% of all workers within a decade.
Therefore, 25-30% of all gainful employment will take place in the home by
o Nearly one-quarter of all jobs will be part-time, temporary or intermittent
positions in less than 10 years, but they will receive the pay and benefits
proportional to their full-time counterparts.
o Congress will create a fully-portable personal pension system to reflect
increased sequential careers and self-employment.
o During the first decade of the 21st century, all large private and public
sector organizations will "unbundle" themselves, outsourcing most
administrative overhead and support functions e.g. facilities, computer
services, payroll, training, benefits management, etc. in order to
concentrate on excelling at the core competencies by which they add greater
value at less cost than alternativeproviders.
o Decision-making in the workplace will devolve. For large public and
private sector institutions to survive, they will transform themselves from
pyramids to networks. Hierarchical authoritarian bureaucracies will be
replaced by authoritative decision-making at the team level by "info-mated"
rank and fileworkers.
o Internet consumer sales will top $100 billion, surpassing catalogue sales
of $90 billion within three years. In ten years, e-commerce will capture up
to one-third of the retail trade, including most business and tourist travel,
and almost all consumer banking, insurance, investments and real-estate, much
of which will be handled by a dozen or so integrated financial giants who
will provide their clientele a full range of financial/investment/ insurance
o Information products and services will generate over 50% of our GNP, and we
will all need a Personal Digital Appliance (PDA) to keep up. (A PDA is a
hand-held device combining the features of a cell-phone, interactive pager, a
fax machine and a palm-top computer.) Already on sale in Europe, PDAs will
offer wireless access to the Internet. Employees will be able to inter-face
with on-line data bases, expert systems and simulations, and take advantage
of main-frame computing power. Consumers will use their PDAs to access
traffic and weather reports, book theater tickets and make restaurant
reservations, buy and sell stocks, pay highway tolls and parking meter
charges. Within 5 years,
everyone reading this article will be hopelessly dependent upon their PDA.
o In 10 years or less, conversational computers with friendly personalities
will handle most routine information-based transactions, including booking
airline flights and hotel rooms, making theater and restaurant reservations,
searching data bases, keeping inventories and accounts, cyber-shopping and
bill-paying. In less than 20 years, most of us will have chatty personal
cyber-assistants programmed to be amiable, trustworthy and collegial, with
whom we will develop meaningful relationships. Home appliances, and
automobiles will be verbally inter-active, as well.
Source: Dr. Gregg Edwards &
David Pearce Snyder
The Snyder Family Enterprise, Bethesda, MD
Call For Information 301.530.5807
Copyright © 2010
Snyder Family Enterprise